Next Generation Supply Management Defined

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Daily Archives: January 29, 2008

Last November, the Supply Chain Management Review ran an article on The Sustainable Supply Chain that noted that being sustainable is now a source of competitive advantage and a matter of corporate survival rather than a costly inconvenience.

The article, based on a study by A.T. Kearney and the ISM that surveyed a diverse group of Fortune 100 firms, revealed that 60% of firms have adopted sustainable practices to strengthen brand names and deduced that it is now time for “wave-two” sustainability: for companies to move beyond saying the right words to truly making sustainability happen.

The article states that supply managers can foster sustainability by ensuring that suppliers incorporate sustainable innovations in operations and processes. (D’uh! But then again, this is an article that says our study reveals that achieving genuine sustainability results from making supply chains more sustainable. Double D’uh!) In particular, processes and technologies that reduce dependency on scarce and expensive resources.

It then outlines the following activities of sustainable supply management:

The Derision of a Sustainable Strategy A strategy defines the values a company wants to emphasize, declares how it will enforce those values, and identifies consequences when suppliers or employees don’t meet the guidelines.

Retooling of the Organization As firms increase the role of sustainability in their supply management practices, they must draft specific guidelines and procedures, create training programs, and introduce sourcing tools that equip buyers to support sustainability goals.

Supplier Relations Management You need to have relations with your supplier.

Which is followed with some implementation guidelines:

Survey the context

Understand the risks and opportunities

Get Ready

Set Priorities

Go

Not bad, but it seems to assume that sustainability is just about the social and environmental issues, which, although important, don’t necessarily address all of the sustainable issues. Plus, like most joint efforts, it’s very high level and doesn’t have a lot of details on implementation.

Then, earlier this month, Supply & Demand Executive ran an article called Building the Green Supply Chain that suggests that going green doesn’t mean going into the red, which the doctor agrees with, providing the organization is smart about how it goes green. (In fact, really smart organizations will find ways to go green and save money at the same time.)

It suggests, unlike the previous article, that although the drive toward a greener supply chain appears to be gaining momentum, the companies that are actually making steps in this direction remain in the minority. According to the article, a McKinsey survey found that while 59% of CEOs believe that their companies ought to incorporate environmental, social, and governance considerations into how they manage their supply chains, only 27% said they currently do – 33% more than the A.T. Kearney and ISM study suggest. This tells us that while Fortune 100 companies may have caught on to the need to get sustainable fast, the majority of global companies, especially smaller ones haven’t. This would suggest that either they haven’t caught on, don’t think they have the resources, or don’t think they’ll see returns from doing so. Hopefully they’ll read this sustainability series and start thinking otherwise!